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2 Stocks Behind Today's Semiconductor Sell-Off

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DiscoverGold Member Level  Friday, 08/17/18 10:30:54 AM
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2 Stocks Behind Today's Semiconductor Sell-Off
By: Schaeffer's Investment Research | August 17, 2018

Weak current-quarter forecasts are weighing on the shares

NVDA stock was still upgraded at Oppenheimer, though

Applied Materials, Inc. (NASDAQ:AMAT) last night reported fiscal third quarter adjusted earnings of $1.20 per share on $4.47 billion in revenue -- more than analysts were expecting. However, the graphics chipmaker offered up weak current-quarter forecast, sending AMAT shares down 9.4% to trade at $42.99.

Analysts have been quick to weigh in on AMAT earnings, too. While KeyBanc and Stifel cut their respective price targets to $71 and $70, Craig-Hallum said the Street's reaction to the company's guidance could create an attractive buying opportunity. D.A. Davidson, meanwhile, forecast a "nice recovery" next year.

Most analysts are already bullish on Applied Materials, even with the stock's 15.9% year-to-date deficit. Plus, the shares were recently rejected by their descending 80-day moving average, and are currently trading near their 52-week low of $42.93 from last August. What this means is that AMAT is at risk of more bearish brokerage notes, which could exacerbate today's slide.

The shares of Nvidia Corporation (NASDAQ:NVDA) are also trading lower after earnings, down 2.5% at $250.97. Like its sector peer, Nvidia's second-quarter adjusted earnings of $1.94 and revenue of $3.12 billion came in above estimates. However, the company lowered its third-quarter revenue guidance, citing lessened demand for cryptocurrency chips.

Nevertheless, Oppenheimer upgraded NVDA stock to "outperform" from "perform," while Stifel raised its price target to $250 from $243. Additionally, Jefferies said it is "buyers in front of NVDA's next gen GPU platform, 'Turing,' which launches in Q3." Elsewhere, Cowen lowered its Nvidia price target to $320 from $325, though this still represents expected upside of 27% to current trading levels.

The bulk of those covering Nvidia stock were upbeat heading into today's trading session, which isn't too surprising given the security's longer-term strength. Year-over-year, NVDA is up around 56%. What's more, the equity's recent pullback from its June 14 record high of $269.20 was quickly contained by familiar support at its 120-day moving average.

https://www.schaeffersresearch.com/content/news/2018/08/17/2-stocks-behind-todays-semiconductor-sell-off

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